Feed-in-Tariffs (FITs) are guaranteed prices for electric energy from renewable sources sold by small producers into the grid. Without FITs, small producers often are at the mercy of distribution networks that are not interested in buying electric power from them, greatly reducing the economic viability of small-scale investments in renewable energy by individuals or cooperatives. A FIT-policy was enacted in Germany, which led to the rapid expansion of distributed renewable electric generation. According to Future Policy, “the production of electricity from renewable sources in Germany was only 6.2 percent in 2000, increasing to 23.7 percent by 2012 and up to about 28 percent in 2014.”
In fact, while FITs can result in excessive spending for too little generating capacity if they are not adapted to declining production costs, they do allow a (controversial) process of establishing at a community or national level what is regarded as a fair price, considering not only the market, but also environmental and social factors. It is thus important that a multiplicity of relevant stakeholders be involved in setting the actual levels of the FITs and adjusting them to changing conditions.